Three points you will get to know in this article:
- Hike’s Rush Gaming Universe (RGU) hit over Rs 150 crore revenue in FY23.
- Despite Rs 150 crore losses, operations revenue surged to Rs 150.5 crore.
- Hike’s shift to real-money gaming and recent funding signal growth potential.
In the past, Hike experienced a period of slow progress and transformations within its business landscape. However, in the most recent fiscal year, there was a remarkable upturn in its expansion. Particularly noteworthy was the growth of Hike’s Rush Gaming Universe (RGU), a platform hosting a variety of skill-based casual games, which surged nearly eightfold, crossing the impressive milestone of Rs 150 crore in revenue for FY23. Despite this achievement, it’s important to note that the company also faced losses amounting to around Rs 150 crore during the same period.
Surge in Revenue and Operations
On a positive note, Hike witnessed a significant surge in its revenue from operations, skyrocketing by 7.8 times to reach Rs 150.5 crore in FY23 compared to Rs 19.21 crore in FY22, as indicated in its standalone financial statement filed with the Registrar of Companies (RoC). This surge demonstrates a substantial improvement in the company’s financial performance and indicates promising growth prospects for the future.
Hike boosts its earnings through commissions on entry fees, winnings, and VIP membership sign-ups. Initially a P2P messaging app, Hike pivoted its focus in January 2021, unveiling two fresh platforms: Vibe and Rush. Vibe fosters social connections through synchronized video viewing, while Rush thrills users with real-money skill-based gaming across various casual games.
Revenue Sources and Earnings Framework
During the fiscal year FY23, the company further padded its revenue with Rs 1.4 crore from interest, investment gains, and miscellaneous non-operational sources. Altogether, these avenues propelled Hike’s total revenue to nearly Rs 152 crore.
The startup data intelligence platform, marketing expenses took the lead as the largest expenditure for Hike, soaring to Rs 142.65 crore in FY23 from Rs 35.86 crore in FY22, marking a substantial 4X increase. Employee benefit expenses, comprising 35% of the overall expenditure, saw a significant rise of 46.2% to Rs 104.42 crore in FY23. It’s worth noting that this figure encompasses employee share-based payments settled in equity, totaling Rs 26.71 crore.
In light of the GST crackdown on real money gaming firms and a tough funding landscape, Hike’s Rush Gaming Universe (RGU) made the difficult decision to let go of approximately 55 employees, equating to 22% of the total workforce.
Hike saw a significant surge in expenses across various fronts in FY23, including server maintenance, IT consultancy, payment gateway charges, and other operational costs. This led to a more than twofold increase in its total expenditure, reaching Rs 299-3 crore, compared to Rs 140.4 crore in FY22.
Loss Mitigation, Cash Outflows, and EBITDA Margin
Despite the uptick in expenses, Hike managed to mitigate the impact on its losses. It reported a 24% increase in losses, reaching Rs 147-3 crore in FY23, up from Rs 118.7 crore in FY22. Notably, the company’s accumulated losses reached Rs 1,923 crore by the end of the last fiscal year.
Interestingly, despite the rise in overall expenditure, Hike witnessed a 9.5% decrease in cash outflows from operations, amounting to Rs 94.5 crore during FY23. This was accompanied by an improvement in its EBITDA margin, reaching -93.92% for the year, a trend attributed to the company’s expanding scale. At the unit level, the company invested Rs 1.99 to gain a rupee of operating revenue during FY23.
Back in 2016, Hike achieved unicorn status when Temasek spearheaded a $175 million funding drive, propelling its valuation to $1.4 billion. Then, in January 2021, it ceased its chat services to venture into the realm of real-money, skill-based gaming.
Since that strategic pivot, Hike has secured backing from multiple investors through three undisclosed funding rounds. Its most recent funding injection arrived in May 2022, led by Web3 enthusiast Jump Crypto, aimed at nurturing Rush Gaming Universe (RGU) – a web3-based social gaming metaverse.
Hike’s persistent quest for the right niche appears to have borne fruit, with the company now enjoying healthy revenue streams, despite the protracted journey. Nonetheless, the company’s sustained losses remain a lingering concern.
Hike underwent a remarkable upturn in its expansion in the most recent fiscal year, with the Rush Gaming Universe (RGU) experiencing nearly eightfold growth, crossing Rs 150 crore in revenue for FY23. However, the company faced significant losses of around Rs 150 crore during the same period, despite witnessing a surge in revenue from operations. Substantial surges in both marketing and employee benefit expenses impacted the company’s expenditure, resulting in increased losses. Nevertheless, Hike’s strategic pivot into real-money, skill-based gaming has secured continued investor backing, leading to healthy revenue streams, despite persistent financial challenges.
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